Ladies and gentlemen, good day, and welcome to the Q2 FY23 earnings conference call of Page Industries Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. V.S. Ganesh, Managing Director of Page Industries Limited. Thank you, and over to you, sir. Thank you so much, and good evening, everyone. It's a pleasure to talk to you, and thank you all for joining us for this call today. It's an exciting time for us to be in the industry such as ours, with an increasing urban population, rapid urbanization, growing aspirations for global brands, shift in organized retail, and an increasing awareness for branded innovative to name a few. It gives branded players like us a huge market to explore and to grow. I'm delighted to inform you that we have registered a robust revenue growth, record margins, and earnings per share performance, added by good growth across all our product categories. We actually have recorded the second-best quarter in our history, just behind the Q1 record which we had. With the demand environment being lukewarm, with inflationary pressures abating a recovery in consumption, we are happy to announce that we actually recorded a 7% volume growth if you look at the growth without mask. Overall, the reported growth is 1%, but, you know, if we look at our core category, our volume has grown 7%. In our core category, the revenue has grown 20%. But if we include mask and if we compare, then it's a 16% growth. We continue to intensify our focus on distribution, modern trade and e-com to drive product strength, increase consumer engagement, while making substantial progress in the digital-led marketplace. Looking ahead, despite the volatile macroeconomic environment, we remain very confident in our ability to further build onto the progress made so far and continue to drive strong top and bottom line growth. This is made possible by our incredible teams who came together to connect closer to the consumer than any time before. Let me take you through some quick highlights before our CFO details the financial performance for the quarter and for the half year. Our Q2 revenue has grown by 16% year-on-year, but shown a degrowth by 6% quarter-on-quarter if you look at the strong Q2 of last year base. Whereas volumes have grown 1% year-on-year, if you look at actually the core category, we have actually grown 7%. Like to like, if we compare, you know, it has shown a degrowth of 10% quarter-on-quarter. Coming back to the volumes, our overall volumes are, as I told you, without mask, it's a 7% growth. As of September end, we are present in 118,000 MBOs, 1,191 EBOs, and 2,741 LFS. Our channel expansion continues to be in line with our growth plans. I'm very happy to share that we have opened our first flagship store in Connaught Place, New Delhi. Few days back we opened our tenth EBO in Dubai. We are also now present in Qatar and Maldives. Delving into the macro environment and its effect, I am pleased to report that the supply chain is back on track despite witnessing major demand shifts. We have invested heavily on mobilizing inventory, both to manage the input cost volatility and bring our stock levels to where it should be. During the quarter, we faced very high inflationary trends, which impacted nearly all costs, including cotton, which is now softening, packaging, fuel, logistics. However, we managed it, and we were able to partially reverse this trend and hold on to our margin strength with the calibrated pricing actions, strong budgets and expense control measures and optimum use of inventories. Our expansion plans are in line with the accelerated sales growth trend, and that we are seeing in the marketplace, and this is supplemented by strengthening our relationships with our supply chain partners. We'll continue to have disproportionate attention on our growing categories, namely athleisure, the women's range and juniors. Our retail expansion has equal focus for tier three and four towns as we have for metros and tier one and two. I'm delighted to inform you that our Speedo business is back on track, and the revenue numbers are very encouraging, and it is in line with our budgets. I would like to take this opportunity to thank on your behalf the 28,000+ associates for the great work they have put in and for showing a very robust performance during the quarter. I have today Mr. Gagan Sehgal along with me, our COO, and Mr. Rahul Shukla, our President and Chief Retail Officer, who will be more than happy to answer any questions that you may have in this domain, as regards sales and modern trade. As usual, I'm joined by Mr. K. Chandrasekar, our CFO, who will now give you further insights on our Q2 financial performance. Let me thank you once again for joining the call today, and I pass on to Mr. Chandrasekar. KC? Thank you, Mr. Ganesh. Welcome everyone to the call, and thanks for being here and your support to Page. Jumping into the financial performance for the quarter, we had revenues of INR 12,550 million, and that, as Mr. Ganesh explained, is the best Q2 in history on the back of the best quarter ever, which was the previous Q1. The last year Q2 was INR 10,840. There's a growth of 16% in value and about a degrowth of 6% quarter-on-quarter. The EBITDA is INR 2,379 million, and this is a growth of 2% over the last year Q2, and there is a degrowth of about 20% quarter-on-quarter. The EBITDA margins are coming in slightly lower at 19%, which compares with 21% year-on-year and 22.2% quarter-on-quarter. We have not pulled back any of our OpEx, which are contributing to the growth of the Jockey brand. We have spent more on OpEx, mainly on advertising and building warehousing and capacity. We have spent on digital media advertising and the e-com growth has been good, so therefore there are attendant commissions. The OpEx has been more. The gross margins remain to be around 39%, so the OpEx in Q2 has taken the EBITDA to about 19%. The Q2 PAT is INR 1,621 million, which is a growth of 1% year-on-year and a degrowth of about 22%. The PAT margins are 12.9%, and it compares with 14.8% year-on-year and the quarter-on-quarter is 15.4%. As I already said, the gross margins have been 39%, which is generally at par, so the pricing decisions which we have taken have been vindicated. As far as the H1 is concerned, these numbers obviously, because of a weak pandemic Q1 last year, clearly are looking extremely good. H1 revenues are the best again in history, INR 25,963 million, which compares to only INR 15,855 million last year H1, which is a growth of about 64%. Similarly, the EBITDA for H1 is INR 5,357 million, compares to INR 2,676 million, a growth of 100%. EBITDA margins are 20.6% for H1 this year as a whole, and last year was only 16.9% because of Q1 under absorption. The H1 PAT is INR 3,692 million, and it compares with INR 1,714 million only last year H1. This is again a growth of 115.4%. With respect to cash and cash equivalents, we have come down to about INR 833 million, and this compares with INR 3,144 million as of June 2022. This is because we have continued to invest in inventory, and we have gone a little ahead of the curve as far as inventory is concerned, which should rationalize a bit going forward. We have a healthy inventory, and that should support further growth in Q3 and Q4. Inventory actually stood at INR 13,592 million as against about INR 11,200 million in June. Net working capital has not gone up because a lot of it is the buildup of inventory has come from the cash reserves, I mean, as well as the payables are more. Net working capital was INR 7,880 million, which compares with about INR 7,300 million at June. With that, I request that we move to the Q&A session. Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may enter star and one on their touchtone telephone. If your questions have been answered and you wish to withdraw yourself from the queue, you may enter star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity, sir. My first question is, you know, with regards to your quote on the volume growth that you mentioned that is, you know, ex of the core category is 7%, but overall it's 1%. Does it mean, you know, that the non-core products sold a bit higher during the pandemic period, and which is now normalizing? If that is the case, how should we look at the volume growth going ahead? Yes. Actually, when we talk about the non-core core products, which is actually what we were talking about, that is the mask. You know, the mask numbers were pretty decent during Q1 and Q2 of last year because of the pandemic. Now that we are post-pandemic, it is natural that it will be low. That's what we meant by the non-core. If you look at our core products minus the mask, the actual, which, considering the inflationary pressure and market environment, we feel it's a decent growth. We're firing on all cylinders to gain momentum and to get back to our core strength. My second question, you know, is with regards to the sharp increase in, you know, the OpEx cost, and that is largely led by two factors. One is employee cost, another is, you know, the high OpEx that I assume is due to the advertising expenses. You have mentioned in the press release about the employee cost being increasing on account of the capacity capabilities building. If you can highlight more on the same, are the costs expected to remain at the same levels going ahead? Or this was a quarter phenomenon, and maybe we see some normalization going ahead. Well, coming to OpEx, there's a couple of things. One is, you know, during the pandemic we were media dark. We hardly had any advertisement or marketing expenses because, you know, we were. Now that we are in the pandemic, you know, we need to get back to those activities. There is a, we are back to normal as far as those marketing expenses are concerned, which is very essential for the growth of the brand. We have also invested in our warehousing capability. You know, when you start a new operation, in the first 3-4 months, its costs are higher before it stabilizes. We are going through that phase. Sorry to interrupt, sir. The audio from your line is fluctuating, sir. Mr. Ganesh? Okay. Is it better now? Yes, it's better. Thank you. Yeah. I was talking about, you know, marketing expenses, which we had to rightly incur to take off, which was not there in the. Sir, I'm sorry to interrupt once again. Please. Let me reconnect your line, sir. Okay. I will quickly reconnect you. Thank you. Participants, please continue to stay on hold. We will reconnect Mr. V.S. Ganesh. Please go ahead, sir. Yeah. I'm sorry for that interruption. What I was talking about was the expansion in the warehouse. The third thing was, we were also investing in building our talent. You know, we had a hiring freeze as far as talent strengthening is concerned during the pandemic. Now, with the growth trajectory which we are looking at, and with the retail expansion which we have, we need to strengthen that, and we have invested. These are all investments for the future. Because we are very, very optimistic about the volumes, and this is, in fact, if you see the overall numbers, even the revenue growth is actually around 20%, if I don't look at the mask as a category. These are necessary investments with the growth trajectory we have. Just one last question from my end. That will be more bookkeeping one. If you can help us with, you know, the tax rate guidance for the full year as well as the CapEx guidance for the year. KC, you want to take the first part? For the CapEx guidance, on the CapEx, we are planning to spend about INR 250 crores upward. What was your first question? Sorry. The line wasn't clear. Tax rate. The tax rate guidance. Because, you know, if you see the first half tax rate, that's been around 24%. For the full year Not very audible. I'm sorry. The tax rate for the first half is around 24 odd%. What should we take the tax rate for this year, FY 2023 and FY 2024? Should be more or less same. When I look at Q2 this year, we had an effective lower tax rate because, you know, for all the new employees, we claimed the 80JJAA, and that was not there. Not many people were joining. Therefore the new employees were eligible for some deduction. Due to that, the effective tax rate of Q2 has come down. Overall, if you look at H1 versus H2, it will be more or less in the same range. sir, if I understand it right, it will be around 22% or 22.2 odd%, whatever its H1 number is? Correct. Correct. Okay, sir. Thank you. That's all from me. The Q2 was 23.7%. Last year it was 25.3%. I expect the effective tax rate to be in the range of about 24%, on a full year basis. Okay. That would be the same for 2024 as well, right? The next year as well. I guess so, because, you know, there is really no change in the corporate tax rate. It is only because of certain, you know, the deductions that we get. If there is more, you know, more people join, there will be more exemption on that count. One should expect around 24% to be maintained, yeah. Okay. Thank you. Yes. Thank you. Participants, if you have a question, you may enter star and one. We have the next question from the line of Tejash Shah from Spark Capital. Please go ahead. Hi, team. Thanks for the opportunity. A couple of questions from my side. First question pertains to increase in inventory. Just wanted to know what is the nature of this inventory built up? Well, it's finished goods built up before the value or is it that we have expanded our pipeline to service the wide basket of products that we are doing? How should we think about the inventory days going forward from here on? I'll take that question, Mr. V.S. Ganesh. Or can Yeah. Go ahead, KC. Yeah. Thanks, Tejash, for the question. Obviously, we have, you know, we're looking back about two quarters back, you know, the raw material prices were moving up and we pre-positioned much of the inventory and we also ordered and paid everyone well. We have gone a little ahead of the curve, as I mentioned at the beginning. The raw material we had about six months RM inventory at the end of March, and now it has come down to about 3.7 or so. But the finished goods from about 2.5 has gone to about three months. Right now we are not building much of raw material inventory until we sort of hit the optimum level of inventory of FG as well. Going forward, in Q3 and Q4, you would expect the inventory to go down. In terms of composition from the INR 13,600 million, about INR 8,000 million is FG and INR 5,000 million is raw material, and the remaining is work in progress. Thanks. Very helpful. Tejash, just- Yeah. This was more of a strategic thing which we did to make sure, you know, those times, if you look at six months back also, the supply chain was not all that robust and we wanted to risk mitigate by having stock. We were also seeing a lot of demand fluctuations and we thought we should have good enough raw stock across the portfolio so that we can build agility and meet the changing market demands. Now that things are normalized, we are having much better control and the buys are reduced and we are leveling up the stock levels. Fair answer. Second question pertains to distribution. The highlight of last 18-24 months of our strategy was very rapid distribution expansion. You mentioned earlier that we wanted to capitalize on the supply chain constraints by the competition. Where do we see this lever now playing out? Because we have now rapidly expanded our touch point, so how should we think about that lever in the next 18-24 months? I think Gagan Sehgal can throw more light on this, but before I pass it on to him, let me tell you, I think, there is much more headroom as far as reach is concerned. We are looking at a pin code wise ward level when we look at the potential. We have a huge potential to grow and, we need to have much better reach. Therefore, we will continue to have the right expansion as far as retail expansion is concerned, both for our channel sales and for EBOs. Gagan you want to throw more light on this aspect? Thanks, Mr. V.S. Ganesh. Thanks for the question, Tejash. Yes, we did go on a rampant distribution drive, you know, in the last 24 months. One reason was also, you know, as Ganesh put it, there is a lot of reverse migration because of pandemic in tier three, tier four towns, from the metro cities. We needed to grow there and be available near the consumer. That is why the rampant growth we saw was very strategic at that point of time. We wanted to, you know, fill in all the gaps, and we did not want consumer to travel far to get our goods. At the same time, as Mr. Ganesh has said, we still see a huge headroom. I mentioned in the past few calls also that we need in a very strategic manner. One, we do not want to disrupt our existing trade partner in case he is doing very well. There is no idea to open another MBO just next to him. We are looking at gaps. We have geo tags on our outlets. Wherever we feel there is a gap, we are today present in all 1 lakh plus towns. We have gone deeper. We are present in less than 50,000 towns also where we see potential, which is a lot further than that now. This drive will continue. I won't say it will be rampant like we opened 30,000 outlets last year, but we have already opened 8,000, you know, in H1. There is no reason why we will not continue, but we will only do it where we do not disrupt the current trade partner. At the same time, the ease of consumer is important and strategically we are outright in distribution. It will continue. I don't think every year why we should not grow, you know, at least 10-15 hundred thousand outlets. Are you able to expand this distribution without diluting terms of trade? Like as we have seen in many other companies, as you expand and go rural or beyond your core areas, you have to give or extend more credit period or terms changes. Are we seeing that kind of pressure with this expansion? That's a very good question, by the way. Whatever distribution expansion that we have done, there is no subsidy in the cost to serve. The distributors and partners are profitable. The reason is that as we go deeper and say there is a market in a tier four town, we don't need to open 10 outlets in that market. There is one strategic outlet which can showcase our brand, right? There our brand can be positioned, you know, because we are a premium brand, affordable premium brand. It's very selective. The throughput per outlet in the smaller towns in all is almost the same as metros, because in metros you will have large number of outlets. From that perspective, the terms of trade has not changed at all, and it's not got compromised in terms of credit period. Yes, when you open an outlet for the first time, at that time maybe we could nurture the outlet because we were not keeping a brand before. Maybe post that, but the business takes care of itself because the consumer knows Jockey and wants Jockey. There's no dilution to the terms of trade. It's all the same, be it a smaller town or a larger town. Great. Last question, if I may. So, for the first half, we are very well within our long-term margin guidance of 20%-22% bang. But looking at where we are on 2Q, would we need any pricing intervention to improve margin from here on, or we can actually crawl back to those levels without any pricing intervention? Tejash, thanks for asking that question. As we look at it today, I don't see a need for an immediate relook at it because the input costs are coming down. The cotton prices, as you can see, is softening, and we can see that happening for many inputs. That should offset some of the pressures which we have. If that is not going in line with our budgets, then we may have to relook at it. But as things stand now, we are well under control. Thanks, sir. Thanks. That's all from my side, and all the best to the team. Thank you. Thank you so much. Thank you. We have the next question from the line of Nihal Jham from Nuvama. Please go ahead. Sir, three questions from my side. The first one was that, over the last two, three quarters we have been facing a supply crunch given, in the kind of demand that we've seen. Was there a case that now that a lot of our manufacturing has got normal, that this quarter the primary sales would have been higher than secondary, given there was a requirement to fill the channel? Just wanted your thoughts first on that. Nihal, the secondaries are in line with primaries. We keep a close watch on this. We are happy that there is no such problem. The secondaries are very much in line with primaries. Gagan, you want to add any more? No. You have answered it, Mr. V.S. Ganesh. The secondaries are in line with primary, and we keep a very close watch because we don't want inventory buildup happening at the distributor point. What has happened is, it has helped us because of, you know, the better supply chain. The distributor is getting exactly what he wants, and the market is getting exactly what they want. Whatever primary is happening is getting sold, because it's in line with the retailer demand and the end consumer demand. Understood. That is helpful. The second question was on the fact that if I look at your volume growth, excluding the mask business, which is, say, 1%, and, you know, the distribution growth both in terms of EBOs and MBOs has been reasonably strong, if I look at the run rate over the last two, three quarters also. Given Gagan, you also mentioned that the throughput per store is more or less similar. Why is it that, you know, maybe a volume growth for a core category has not been in sync with that? Nihal, if you see the core category, that's why I was saying the core category has actually improved by 7% and- I'm really sorry to interrupt, sir, but your audio is fluctuating. Okay. I'm sorry. Is it better now? Yes. It's audible to me. Yeah. Please go ahead. Yeah. You know, Nihal, what happened was, you know, we were one of the first companies that we were able to bounce back quickly during last quarter, Q2, post pandemic. We have a strong base there, you know. If you see across the consumer brands, companies which bounced back very quickly have always recorded these kind of, say, 5, 6, 7% growth. Because last Q1 we lost 28 days. If you see historically, our Q1 is always the best quarter. We front-load the inventory, which didn't happen last year. One, because we lost 28 days, and two, the partners, distributors and partners didn't want to over-invest because times were very uncertain. When the dust settled and when normalcy came back in Q2, there was huge buoyancy, and we did well there. This 7% growth is on that strong base, you know? If you see, they were eating into the inventory, and they were correcting it. Today, this growth is on a normalized inventory as far as distribution partners are concerned. Understood. Just last question on the distribution part was that, when you are looking at targeting the, say, the incremental outlets, are we primarily looking at hosiery stores and garment stores, or we are looking at exploring other avenues also for the Jockey brand? You know, actually you'll be surprised that, you know, what we actually, you know, explored during COVID. It's not just the hosiery stores. Obviously, that's the core. There are all kind of unconventional outlets who during COVID, you know, were not able to survive and they moved to apparels and specialty store, you know, like petrol pumps outlet, where you see a beautiful Nisai's. This is the operator. I'm really sorry to interrupt. Mr. Sehgal, your audio is fluctuating. It's better now? Yes, sir. Please go ahead. It's not just hosiery stores. We are, you know, evaluating and exploring other options. Like I was mentioning, you know, places where the brand does not get compromised. Today you will see the big outlets near the petrol pumps, you know. We are even present there, you know. There are all kind of unconventional outlets that have come in, and in fact, they wanted to partner with us. As we continue our distribution expansion plan, you know, it will be in line with where we need to be present. At that point of time, if a hosiery outlet which cannot represent the brand in the best possible manner, if we have any other alternative, we'll go ahead with that also. We have all kind of different. Be it chemist, for example, our masks and socks today are present in chemist shops as well, right? Or cosmetic shops. We are not just exploring hosiery. Sorry, just final question would be that out of these outlets that we have, what is core to the innerwear and athleisure category ex of masks then? Can you repeat the question again, please? Yes. I was asking, of these 118,000 MBO outlets, what would be core to the innerwear category and athleisure excluding the masks that we are selling? Actually, there is a lot of disruption on the line. Maybe it's on my line. I know if I can be reconnected or if Mr. V.S. Ganesh you could take this question. I'm not able to get it. Yeah. Nihal, you know, what Gagan was saying is, you know, out of the 118,000, we are looking at all options. If you look at beauty shops, they even—some of them even sell our lingerie. And some of the gyms sell our gym wears. You know, maybe the inventory is very curated there. The product range which they keep, which is very relevant for them. We do explore. Bulk of them, as you rightly said, are apparel or garment shops. Most of them are multi-brand outlets which focuses on garments. There are few, you know, which may be doing only kids wear. They may only uplift juniors. You know, that is how we have been focusing. Bulk of them, most of the outlets which we have are, you know, garment shops which sell a whole range of products. Sure, sir. I'll come back in the queue. Thank you so much. Thank you. We have the next question from the line of Madhu from Canara HSBC. Please go ahead. Just on the modern outlets of let's say a Westside or a Zudio and all on the. Are they acting as a competitor for athleisure segment? Because they are penetrating fast in the urban areas especially. Whether the footfalls from our EBO potentially we might be losing to some of that and where the athleisure volume can get impacted. Rahul, you want to take that? Yeah, I will. Am I audible? Yes, Rahul. Okay. The market is big enough as far as athleisure segment is concerned, and we do not see any decline in performance just because there are few departmental stores which are coming up. They have their own strategy catering to the family and the segment that they want to operate in. Our customers are very clearly very loyal to the brand and the entire gamut of clothing that we provide, across athleisure, activewear, innerwear. We do not see any impact coming in because of the expansion of departmental stores. Okay. In terms of next 2-3-year perspective, in terms of your distribution expansion, I mean, it is good. I mean, the EBO expansion momentum will continue because lot of disruption is happening on the channels through e-commerce and all that. So any read on that? Second, on the RM is actually pulling off in terms of cotton price. And are we carrying the high cost inventory which it can now impact us in second half? Thanks. I will answer the expansion part, then maybe V.S. Ganesh you can handle the last question. We've been opening Madhu close to 150-200 stores year on year. There's no reason that this trajectory is gonna slow down anytime you know be it the next two years. There are enormous opportunities that exist across these retail you know through more than 2,500 plus towns across different channels of that we have, be it e-commerce, be it MBOs, where MBOs right now are present only in 408 cities. The amount of opportunity that exists, the potential that exists is enormous for a very long time to come, and we continue to drive this. We are building capacity. To increase this expansion as we go forward. Yes. Madhu, answering your second question, we will. We are not going to overbuy any longer. We will be buying only what is absolutely essential because we are armed with sufficient inventory, raw material and finished goods. We will be actually utilizing that before we spend more cash to buy more material. Secondly, we have done a lot of work on the supply chain side to improve on time in full deliveries. In fact, it has now started reaching high 90s. In fact, last month it was 97% on time in full. With that kind of predictability in supply chain, we can afford to have less buffers as we move forward. We are closely working with our vendor partners, and they are also stabilized as far as their operations are concerned. We are utilizing the material on hand. Okay, sir. Thanks. Thank you. We have the next question from the line of Rishi Mody from Marcellus Investment Managers. Please go ahead. I have a few questions. First, on the EBO front and the athleisure front. How much of our revenue contribution comes in from the EBOs and the athleisure segment? Then I'll maybe get into the second part of the athleisure questions, if you can get me this answer first. Yeah. Rishi, as you know, we actually don't give those segmental numbers because it is not good for you and me, because this is something which is sensitive as far as competition is concerned. I may not be able to give you specifics, but I can tell you one thing. Our athleisure segment is actually growing, and our modern trade is also showing robust growth, you know, because people tend to go back to offline or brick and mortar and especially athleisure, they want to experience the buy. This usually, most of it happens in EBOs. Both are growing. We have also come out with very exciting product range. Today we have a very rich product portfolio which is actually fueling the growth. Right. Okay. You know, since this is mainly a franchisee model, right? The two key determinants for a franchisee would be their payback period and the like for like growth. Can you shed some light on, like, how much is the payback period for an EBO store that you all are targeting? What's been the like for like growth over the last three, four years, like pre-COVID versus today for your EBOs so that we know how much or, like what the, what's the growth trajectory for existing EBOs? Mr. Rishi, I think Rahul will be the right person to answer you on this. Rahul? Actually, thank you, V.S. Ganesh. You know, we, like you rightly said, we operate through a franchisee model, which is an outright business model where the rights and obligations are very clearly demarcated. The franchisee's responsibility to invest in the fixtures, furniture, store rentals. Our responsibility is to ensure that they get merchandise and the brand continues to be strong and they continue to do great business. The very fact that we've been opening 150-200 stores year after year is a clear reflection of the fact that the franchisees, you know, find this business model profitable, extremely profitable. That's why, in fact, we have a large number of franchisees who have multiple stores with us. Across, we have now close to 1,200 stores. The number of franchisees are 600+. Precisely reflects the faith and the confidence of franchisee community in the store, in the walking concept, retail concept. The second part of your question, which is about the like for like growth. In fact, for the last many quarters, the modern retail channel actually has delivered double digits, high double digits like growth across the channel and a positive like to like growth except for one quarter where the lockdowns made it impacted the number of days that was open, which was in quarter one of last year. Otherwise, consistently, all our stores have had a very positive like to like growth. Got it. That's encouraging. Thank you. Second, my questions is on the supply chain, right. You said that we have recently achieved a 90%+ predictability on supply accuracy, and we have tied up with a vendor to help us with this. Could you shed more light on what's happening to get our fill rates up and our supply chain more robust? Yes, Rishi. What I said, predictability, meaning the supply, on-time supply from our supply partners, be it raw material supply partners or finished goods supply partners, have increased. Okay. This is mainly because we also sometimes, if there are any raw material issues for the garment vendor, for example, outsource vendor partner, we are actually helping with the inventory which we have. This is also one reason wherein we decided to have higher inventory because those were times when working capitals were under strain, and we thought we would rather put our money to better work during those times so that we can get mobilized capacities. With that, it has helped the order partners, and today they are back on track, and that's why the on-time supplies have improved to high 90s%. When this happens, it no. Actually improves availability for the front end also, because as Gagan Sehgal rightly said sometime back, when the inventory health improves, you re-sell the right thing at the right time, rather than giving an alternate and pushing some other product, and which creates that ripple effect or bullwhip effect in the supply chain, and it pushes you through peaks and troughs. Now that we have good availability and we are fulfilling the true demand of the market rather than pushing, you know, this really helps in the long run. Right. Your primary sales growth and your secondary sales growth is in tandem with each other, as you mentioned earlier, and that's reflective of these initiatives. Yes. Absolutely. Absolutely. Understood. We are more or less moved to ARS, and that is also helping quite a lot because that means our fulfillments are based on the true rate of sale and based on the true market demand. Right. Understood. You brought in an external consultant or something you mentioned, or is it just for this you mentioned some external vendor? You tied up with an external vendor for your supply accuracy modeling? No. What we did is we have one of our supply chain planning engines which was known as JDA, which is a world-class support system for supply chain planning and management. We have implemented that, and with that we are able to have much better supply chain optimization. We have also worked with a vendor partner- I'm sorry, what was the software name? I couldn't get you. It's called Blue Yonder. Blue Yonder. Right. Before this it was known as JDA, now it's called Blue Yonder. Right. We have implemented that. With that, our supply chain team, we're working on supply chain optimization and we also planned some lead differentiations are possible there with that. For example, we keep some uncolored fabric, we call it gray, and we can afford to color it just in time so that we can get much better speed to market. We are able to do these kind of interventions more efficiently now. By having rationalized very, very strategic supply partners, they're also willing to take risk and pre-position raw material to enable speed. Right. Now, as of today, what would you say your fill rates are for the MBOs and EBOs? See, fill rate based on the primary orders which we are getting is almost 90%. I can say early 90s% to mid-90s%. Our demand accuracy is improving rapidly because of the ARS implementation. The ARS implementation is ongoing, so today we have reached around 80%, and as we reach 100%, this will improve. Got it. Got it. The strength of inventory also helps because if there are any fluctuations also, the buffer stock really helps. Got it. Understood. All right. This is super helpful. Thank you. Thank you. Thank you. We have the next question from the line of Ankit Kedia from Phillip Capital. Please go ahead. Questions from my side. First is on the demand environment. You mentioned in the opening remarks demand is slightly lukewarm. Can you just elaborate more? Is it across categories, where we are feeling pressure at the entry level and, even across geographies, in tier two, tier three markets, the pressure is higher on the demand or it's broadly based? Well, you know, we have grown, so you know against the high base. What has happened is the draining of inventory and people not willing to invest during uncertain times and actually utilizing the stock and all actually fueled huge sales at that time. Because when it dries up and when the supplies are also tight, people want to buy and get the share. All these disruptions were there, and today it has normalized. We have healthy inventory. If you see general purchases softening. One of the areas where even though we have grown, and just an example, even though we have grown in the category, athleisure has comparatively grown lesser than other categories. This is very much understandable because this is back to office time. It is not any longer work from home, so the athleisure utilization comes down. The share of the wallet comes under pressure because everybody, when they want to go back to office, the demand for formal wear goes up. When the wallet share goes for formal wear, you know, athleisure may be parked. We see these as temporary phases, which I think, you know, it's a passing phase and we are overcoming. Various initiatives we are taking, including improving the distributor health of inventory through ERS, DRS. We will be able to bring all this back on track. My second question is regarding the pricing action. If the cotton prices continue to fall from today, would you be willing to reduce prices given that the competition reduce prices? Or, you know, you would prefer to do more A&P spends and other initiatives, you know, trade initiatives or, you know, reduce prices. Given that you are in Q4, your modern classic factory is also going to come in, which is going to be a very big factory. So from a tier two, tier three market perspective push, can we see a price cut if not a price increase? Well, if I look at and read the pulse of the market, I don't think price is an issue. You know, the consumers don't feel our product is expensive, and we always positioned our product as a value for money, the position for our consumers, and it continues to be the same. None of our supply partners, retail partners or none of our consumers when we interact with them, none of them feel we are pricey. If you see our current EBITDA also, it is not in line with our usual numbers. We knew this when we were doing the last price intervention of around 3.69%. We knew there will be a quarter wherein the EBITDA will be under pressure. We didn't want to increase our price because always looking at long term, we always knew this high price of the input can't sustain itself and it will soften. We kept that in mind. We I'm sorry to interrupt, sir. Sorry. Sir, the audio is slightly fluctuating. Do you want me to repeat what I? Yes, sir. Thank you. Yeah. What I was saying is, you know, the price increase which we had last time, when we did, we knew that the raw material in the medium term will soften. We kept that in mind, and we knew even if there is going to be a short-term pressure on EBITDA percentage, we will not outprice ourselves or increase our price, because we always wanted to be a value for money brand for our consumers. We are already budgeted, and today when I look at it, the raw material price movements are in line with what we assumed in our budgets. Sure. My last question is regarding scrap sales. Last year, if I see we had INR 150-odd crore of scrap sales, from the past generation of around INR 40 crore-INR 50 crore. That would also come in the base this year or, you know, the scrap generation at the plant is very, very high. If you can just throw some light on why last year the scrap sales was high and is it, you know, coming in the second half, in the base, for this year? Two things. Scrap sales was low during pandemic times because these are small time vendors who have cash issues and they, you know, so they were not able to take it at the right price. We also thought we will wait for getting the right price. Second, we are also find much better vendors who can take the scraps, and therefore we are also getting better rates than before. Sir, that would also be in the base for the second half of this year and which would also impact margins given that, you know, scrap would directly flow to EBITDA. Would bulk of that be in the second half of last year, so, you know, the second half of this year will have some base impact of that as well? I actually don't know because this is not a big component. I don't think this can swing the needle that much. Frankly, I need to check and I don't know whether KC can throw some light on this. You see, I don't know what you mean by scrap because there is also an item sale to our FOB vendors. Taken together it is divided by INR 22 crore, right? Sir, I'll take it offline with you separately, sir. Yeah. Thanks a lot. Thank you. Thank you. Before we move to the next question, we would like to request participants to limit their questions to two during the initial round. We have the next question from the line of Akhil Parekh from Centrum Broking. Please go ahead. Yeah, hi. Thanks for opportunity. My first question is on the, like, category-wise growth. Would it possible to share like the first half of the year, which category grew fastest and which was the slowest? Actually, if you see first half of the year, all categories have actually shown good growth. Hello? Appreciation. Hello? Mr. Parekh, are you able to hear us? Yes, yes, I can now. Yeah. Yeah. If we look at the first half of the year, we are very happy. In fact, all categories have shown good growth except for mask, which is natural. It is on expected lines. Otherwise, all categories have shown growth. In fact, all our channels have also grown. In that sense, we are in a very good position. Even with back to office, our athleisure has actually grown. Maybe the rate of growth might not have been as high as Q1, but it has still recorded growth. Athleisure is growing even if we compare with the pandemic period. That is what you're saying? Yes, yes. One is because of the retail expansion. Second, it was a discovery for our consumers. We were able to attract a lot of new consumers during that time and, you know, so there are repeat buys happening. Retail expansion is helping. The product portfolio enrichment, which we have brought in, is also helping. In fact, our work leisure is also something which is a very exciting product range which people can wear both for leisure and for work. What our product development has done is amazing, and with that, we are continuing to see growth. As you know, this is a huge potential category with single-digit market penetration at 7%-8%. There is so much headroom for us to grow in this category, you know, even though it is post-pandemic. We'll continue to work aggressively on these categories. Yeah. Good to hear. Second, on the channel-wide contribution, if you can please share, like, how much of the sales has come from MBO, EBO and modern trade and e-commerce? Akhil, I'm sorry. As you know, we usually don't give those splits out, you know, because it's, you know, we feel it's very sensitive to give those splits out. Okay. No problem. Thanks a lot, and best wishes for coming quarters. Thank you. Thank you so much. Thank you. We will take the next question from the line of Swati Jhunjhunwala from DT Capital. Please go ahead. Yes. Thank you for taking my question. My first question was, what was the volume growth in the core categories as well as overall, QOQ, over quarter one of FY23? KC., you want to take that? It was mentioned as 7% over the year-on-year. Okay. Yes. Right. I don't have a ready number on the comparison of Q1. I can get back with you. Okay. Yeah. Second question is related to the CapEx. The INR 250 crore guidance that you have given, is it for the full year, like FY23, or is it for the second half? Because I assume in H1 we have done around 88.8 crore sort of CapEx. Yeah. I mean, it is for the second half. It could be more than that. It all depends upon how the pace of the Odisha expansion coming up. Simply we're pitching that it should go live in Q1 of FY 2024. INR 250 is something we expect to spend in H2. Okay. Last question is, this time our margins were very low at around 19%. In Q3 and Q4, do we expect the margins to go up, or do we expect it to be around the same range, like below the previous four quarters? We typically pitch for 20%-21%. There's no question mark on the margins getting achieved. As you know, the advertisement is not a linear spend, while some of the capacity creation of manpower and warehousing is. Given that the raw material prices are also weakening, we should expect. I mean, even in this quarter, the margins have been pretty good, 19%. Going forward, we should aim for at least 20%-21% in the next two quarters. Okay. Just the last question. Hello? I lost you there. Sorry. Yes. Sorry. Just the last question on the ad expenditure. How much was the media and ad expenditure as a percentage of sales this quarter? How much was the? The ad expenditure as a% of sales. Can you give me a second? Yeah. We spent about INR 440 million. As a percentage of revenue, it was about 3.5%. INR 40 million in Q2, and it is about 3.5%. Should we assume that 3 point should be the approx percentage for Q3 and Q4 as well? We typically restrict between 3.5-4. Again, it depends. It's not necessary that it should be. It It must be a campaign. There must be reason like, you know, digital presence and all that. Yeah, that would be my answer. Okay. Thank you so much. Yeah. Thank you. Thank you. We have the next question from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yeah, thanks for the opportunity. Sir, what was the volume contribution of masks in this quarter for Q2 FY23? Hello. Sorry. This is the operator. Mr. V.S. Ganesh, can you hear us? Yes, I can hear you. Yeah. I was asking what was the contribution of masks in this quarter, Q2 FY 2023? It was very low. In fact, it is, you know, it's very, very soft. It is, you know, the uplift is post-pandemic. It is in few thousands per month from the hundred thousands we might have had pre-pandemic. It was like around 0.2%. Sorry, sir, your voice is breaking. I'm not able to get the number you are saying. Even for last quarter, if you can mention the number. Last quarter in terms of revenue contribution it is about 2%. 2%. As for the Mr. Chandrasekar, I'm really sorry to interrupt. Maybe I'll need to disconnect and reconnect your line, sir. Just give me a moment, please. Sir, please go ahead. Thank you. Did you hear my answer, no? No, sir. I did not hear the revenue and volume contribution for the last quarter for masks. The revenue contribution of masks was about 2%. It is much less than 1% this year, Q2. Okay. Volume contribution, sir? It should be in a similar range. Just give me a second on that. It was about 5% in terms of volume. Last year. Yeah, last year. It's about 0.5%, this year, Q2. Got it. Secondly, I wanted to understand, sir, in Dubai, you now have 10 stores. What is the outlook for the Middle Eastern geography? As well as do you have your own manufacturing operations there, as of now? Middle East is a huge growth opportunity area for us. If you look at all our licensed overseas territories, this is the most exciting place. We are actually focusing on the Middle East, especially Dubai. It is just we are making good investments. Our partners there are investing. That's where we have our tenth EBO just opened very recently in Dubai. We are also present in places like Dubai Mall. You know, the performance so far has been engaging and the partner is therefore investing further on the business. When it comes to supplies, no, we do support the supplies from here. We manufacture and supply from our units or from our source vendor partners from here. Because it's very important we take care of the quality of the product and we are responsible for it and it's coming from our sources. Got it. Do you plan to open your own manufacturing operations there? Not as such, because it operationally can be very expensive. We may not get the operating cost advantage because as you know, raw material base is not there. All raw materials would end up getting imported there. You know, labor cost is much higher there. We may not be very competitive if we manufacture there. Second, today, for the volumes, it doesn't also justify with the scale. It doesn't justify a manufacturing facility there. Got it. If you can speak something about the potential, the industry and the growth trends and how do we sort of what is the current market share and how do we see our market share improving in that geography? Well, as you know, the economy, we despite the recession and all that, I think we are in a better position. I think India is going to be a growth story. There is a estimated growth of the middle income bracket and retail is getting more organized with all this and also which is happening, you know, it's very rapid. After this I'm sorry to interrupt. The current speaker, your audio is fluctuating. Yeah. Is it better now? Yes, sir. Thank you. Sir, my question was for Dubai, not for if you understood it for India, then my question was for Dubai, the industry growth prospects. Oh, yeah. Okay. Gagan can also throw more light on this. You know, it is very exciting. The thing is to start with there is a huge expat community actually buys from here and goes. They are being the first early loyalist of a brand and the footfalls. Now we can see even the local population is well accepting because of the quality of the product and the range which we offering. That is where we are. You know, the sell-through is so good that our partners are even willing and have already gone ahead and invested in Dubai Mall, which is a very expensive place to be in, and they are finding it to be a viable business proposition in such places, the Mall of Dubai Mall. There's a tremendous opportunity there for us to grow. The penetration is very low. What we have is some very luxury brands which are supra-premium, and there is very little mid-premium brands present there. Then there are all these other local imported stuff which is there. In the mid-premium, the space, there is a lot of space there which is not occupied. This is where we are seeing a huge potential for us to grow the business. Gagan, you want to add anything more? Sir, I think you have actually captured it beautifully. Just to a couple of points from my side is, you know, currently we see huge potential there. That is the reason why first is to position the brand. How do you position the brand is to have your exclusive brand outlets in the best malls. The partners are seeing that. Hence, if you see from last year, from 4-10 EBOs, we have expanded at that rapid pace. Now, there is a local Emirati population, and there it is not a question of, you know, who actually is your target consumer. Almost everybody is your target consumer there. Once the brand is positioned, we also see a huge potential in the local population there, you know, which wants products from brands like Jockey. We are creating right now, and we are working on more and more awareness. That is what we are focusing on. I think it's going to be a, you know, very, very exciting market for us going forward, where we can expect very, very healthy growth in years to come. Got it, sir. Thank you. Thank you. We have the next question from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, sir. Good evening, and thanks for taking my question. Just looking at your comments, you made this call. Number one, the distribution expansion we have seen during COVID times, that will continue, but at a slower pace. Second is that we don't intend to take any more pricing, given the current raw material situation. Based on these two constructs, is it fair to conclude that there is the revenue growth momentum that we are seeing currently on a YOY basis, we should see further moderation from here on? I don't see any reason for further moderation. I think we will get back to the growth. You know, this is. As I see it, 7% was more of a costing because of Excuse me, sir. Sorry to interrupt again. There's a slight fluctuation. Yes, it says that now. One moment. Just one moment. Please go ahead, sir. Yeah. Am I audible now? Yes, it's better. Thank you. Mr. Sameer, what I was saying is, generally, if you see all consumer goods segments, during the festive season, the offtake was or the sell-through was not as good as the market expected. It has softened. I feel it will rebound because it's a temporary phase is what I feel. When I look at distribution and the inventory is getting corrected, we have taken a lot of action. The health of the inventory is improving. This should help us to have better sell-throughs, because this will mean much better working capital utilization for them, better rotation of the money, which is going to be not only profitable for them, but also to leverage on the growth which we have planned. I see this as a short term. You know, last year was turbulent and we had our peaks and troughs. I think we should look at how it is going to pan out for the year. I am sure the way it is looking at the end of the year, we will be very much on course as per our budgets and plans. We have been looking at very aggressive growth, and we are very optimistic that we'll be hitting that. Right, sir. Thanks. That's all from me. Thank you. Ladies and gentlemen, that was the last question, and we will now close the question queue. I would like to hand the floor back to Mr. Chandrasekar for closing comments. Please go ahead. Thank you all for dialing into this call. Apologies for some of the audio issues we were facing. Thanks for your support to Page. Have a good day. Bye-bye. Thank you, members of the management. Ladies and gentlemen, on behalf of Page Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.